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Analyzing the Application of the CISG in Arbitral Tribunal
Analyzing the Application of the CISG in Arbitral Tribunal
Two-thirds of global commerce is accounted for by the 78 contracting nations that have ratified the United Nations Convention on Contracts for the International Sale of Goods (CISG). As there are now more foreign sales contracts than ever before and it hasn't been extensively considered, nevertheless, how international arbitration tribunals would apply the CISG. The purpose of this paper is to investigate how arbitral tribunals use the CISG as a topic of scholarly discussion. It goes over the things arbitration panels need to think about when deciding whether or not to use the CISG. There was a debate over whether the Convention applies to arbitration agreements is also examined in this article, given that Art. 11 CISG does away with the formal requirements of sales contracts. The emphasis is on how crucial it is to discern between circumstances in which the parties have selected the appropriate law and those in which the arbitral tribunal determines it. One may choose to opt out, apply the CISG indirectly, or apply it directly. The Contracting Parties may opt to apply the Convention under the legislation of a contracting state, to choose the CISG directly, or to exclude the CISG.
CISG and Arbitration
An arbitration agreement must be in writing as per the UNCITRAL Model Law on International Commercial Arbitration along with the other arbitration laws, such as the New York Convention. Whether the arbitration agreement or contract was reached verbally, via conduct, or through another method, this criterion still stands. The International Commercial Arbitration Group takes a different tack and does not demand that a sales contract be signed or supported by written documentation. There are three views on whether Art. 11 CISG can be applied to arbitration agreements. The first holds that the CISG, and Art. 11, can be applied to arbitration agreements because they express "settlements of disputes" in Arts. 19(3) and 81(1) C agreements to arbitrate, fall within the purview of convention.
The other view also there which suggests that arbitration agreements are outside the purview of the CIS, meaning that neither the formulation nor the structure of the arbitration agreement is affected, and method proposes that the CISG governs the drafting of the arbitration agreement, but it rejects the application of Art. 11 CISG to arbitration agreements. It would have to adhere to the formal requirements of Art. II of the New York Convention, and this approach does not fully respect the separability of the international sales contract from the arbitration agreement. Therefore it is suggested to reject the application of Article 11 CISG to arbitration agreements as they still need to comply with the formal requirements of the arbitration laws and regulations and aren't exempt from them based only on the CISG.
Due to their common values of transnationality, party autonomy, consensus, and impartiality, the Convention on the Rights of the Child (CISG) and international commercial arbitration make a good match for international trade. The application of the CISG in international business arbitration is a contentious subject, as it was created especially for international commercial disputes. The legislation that applies in a CISG member state may be selected by the parties directly, or they may choose to opt out of the Convention. If arbitral tribunals are located outside of a contracting state, they are not subject to the CISG. Nonetheless, they must use Art. 1(1)(b) of the CISG to apply the CISG if arbitration rules demand that they follow conflict-of-laws regulations. The CISG cannot be regarded as a component of or commercial use of the lex mercatoria.
References
[1] Janssen, André, and Matthias Spilker. “The Application of the CISG in the World of International Commercial Arbitration.” Rabels Zeitschrift Für Ausländisches Und Internationales Privatrecht / The Rabel Journal of Comparative and International Private Law, vol. 77, no. 1, 2013, pp. 131–57. JSTOR, http://www.jstor.org/stable/24540332. Accessed 9 Feb. 2024.
[2] Schmidt-Ahrendts, Nils. "CISG and Arbitration." 59.3 (2011): 211-223.
[3] Gruber, Urs Peter. "Convention on the International Sale of Goods (CISG) in Arbitration." Int'l Bus. LJ (2009): 15.
[4] Fillers, Aleksandrs. "Application of the CISG to Arbitration Agreements." European Business Law Review 30.4 (2019).
- Ongoing dispute on whether Article 11 of the CISG applies to arbitration agreements.
- Balancing the autonomy of sales contracts and arbitration agreements calls for reconsidering the application of Article 11 to meet formal arbitration requirements.
- Despite controversies, shared values make the CISG and international arbitration well-suited for resolving global trade disputes.
